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SOUTH AFRICA: JP Morgan See Two Rate Cuts in 2025 But Note Uncertainty

SOUTH AFRICA
EM BulletBulletEmerging Market News
  • JP Morgan’s outlook continues to be for a 25bp cut to 7.50% in January, but the outlook beyond this is less certain. Near-term inflation dynamics continue to be more favourable than projected by the SARB, leaving some room for a marginal downward revision of inflation projections, but the SARB will likely balance these with elevated uncertainty in 1H25.
  • JPM’s base case sees two policy rate cuts in 2025 to a level of 7.25%, but with a range of 7.00-7.50% hinging on ZAR dynamics next year. In the event that USD/ZAR remains 18 in 1Q25, the second cut to 7.25% could potentially be pulled forward to March (July currently) and further easing may be possible.
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  • JP Morgan’s outlook continues to be for a 25bp cut to 7.50% in January, but the outlook beyond this is less certain. Near-term inflation dynamics continue to be more favourable than projected by the SARB, leaving some room for a marginal downward revision of inflation projections, but the SARB will likely balance these with elevated uncertainty in 1H25.
  • JPM’s base case sees two policy rate cuts in 2025 to a level of 7.25%, but with a range of 7.00-7.50% hinging on ZAR dynamics next year. In the event that USD/ZAR remains 18 in 1Q25, the second cut to 7.25% could potentially be pulled forward to March (July currently) and further easing may be possible.